An RBI working group has recommended setting up a Financial Resolution Authority (FRA) to effectively deal with failing financial institutions and ensure overall stability in the system.
“There should be a single FRA mandated under the law for resolving all financial institutions and FMIs (Financial Market Infrastructure), in coordination/cooperation with the respective financial sector regulators, as deemed necessary by the FRA...(it) should be institutionally independent of the regulators/supervisors and the government,” said the RBI report. The report on 'Resolution Regime for Financial Institutions' underlined the need for a policy framework to deal with the failure of such entities.